Rate Article:

Saudi GSM revenues are expected to reach $ 7.9 billion in 2007, up from $ 3.4 billion in 2002, forecasts the Arab Advisors Group. Saudi Arabia’s GSM penetration rate will catch up with its Arab Gulf states peers in the coming few years.

A privatized and more market savvy Saudi Telecom (STC), and expected competition in the Saudi GSM market after 2004, will propel the Saudi GSM market to become the most lucrative segment, by far, in the Saudi communications landscape.

“It is true that Saudi Arabia’s GSM market has belatedly boomed. However, a growth boom in currently in full swing and will continue through out the forecast period.” Arab Advisors Group’s senior analyst, Shahin Shahin said. “The GSM market is increasing in relative importance and will head towards becoming the most important segment in the market,” he added.

Although revenues from the fixed lines service between 1999 and 2001 have increased at a CAGR of 6.5 percent, its share of total operating revenues has declined to 48 percent in June 2002 down from 67 percent in 1999.

Revenues from mobile services, on the other hand have increased at a much higher CAGR of 41.1 percent, and its share of total operating revenues has also increased to 48 percent in June 2002 compared to 29 percent in 1999. This indicates that although revenues in both fixed and mobile segments are growing, mobile revenues are increasing at a much higher pace and are set to exceed those of fixed services.

A major boom happened after 1999, when the mobile subscribers base grew at a CAGR of 82 percent during the period 1999 and 2002. This was due to rate reductions and better marketing on the part of STC. 2002 was another strong growth year, which is also mainly attributed to the introduction of the prepaid service.

During the period between 1998 and 2002, STC mainlines subscribers grew by a CAGR of 11 percent, reaching around 3.3 million subscribers. The mainlines’ market experienced substantial growth in 1999 growing by 25 percent, however, since then the yearly percentage growth has been declining.

“The growth in mobile adoption has radically changed the traffic patterns in the Saudi market,” Shahin noted. “Between 1999 and 2001 the absolute number of International calls via mobile grew by 305 percent, while the number of minutes over mainlines grew only by 26 percent,” he wrote in the report.

The Arab Advisors Group projects Saudi mainlines revenues to decline to $2.72 billion by end of 2007, compared to 2.79 by end of 2002, a CAGR of –0.4 percent. At the same time, the Group projects mobile revenues, including roaming, to exceed $ 7.9 billion by end of 2007, growing at a CAGR of 14 percent. By 2007, GSM market penetration is projected to reach the 77 percent penetration mark, which close to existing penetration rates in other gulf countries like the United Arab Emirates (UAE). — (menareport.com)